Question

With the help of an example, show how marginal cost can be obtained from total cost.

Answer 1

Marginal Cost is the extra cost of producing one more unit of output.
It tells us how much total cost increases when we make one additional unit.

Formula: `MC = (Delta TC)/(Delta Q)`

where:

• ΔTC = Change in Total Cost
• ΔQ = Change in Quantity (usually 1 unit)

Example:

• Total Cost for 3 units = ₹ 222
• Total Cost for 4 units = ₹ 252

So, MC of 4th unit = ₹ 252 − ₹ 222 = ₹ 30

This means it costs ₹30 to make the 4th unit.